Is your financial aid being eaten up by debit-card fees?

Students across the country are headed back to college, and millions of them will get financial aid disbursed on a debit card.

The cards are convenient and save money for the schools. But these debit cards can be expensive for students, who could see their financial aid eaten up by fees.

This month, the Federal Deposit Insurance Corp. announced it had ordered the nation's largest player in campus debit cards — Higher One — to return about $11 million to roughly 60,000 students related to fees the company charged for insufficient funds. Higher One, which is used by the Johns Hopkins University, did not admit to any wrongdoing butsays student accounts have been credited.

It just seems that students have a big target on their backs, with financial institutions working all the angles to lure young adults. Credit card issuers aggressively pitched plastic to unemployed students for years until Congress halted the practice. And the loan scandal a few years ago revealed that some schools received kickbacks for steering borrowers to certain lenders.

And now, if students don't pay close attention, they can find precious aid dollars wasted on debit-card fees.

"This is another example in a long run of examples of banks targeting colleges as gatekeepers to young consumers," says Rich Williams, higher-education advocate at the U.S. Public Interest Research Group.

Students don't have to go along with the debit cards. They can opt to receive their aid in ways that are free — something students should explore before arriving on campus.

But this homework shouldn't rest on students' shoulders alone. Schools choosing to disburse aid through debit cards need to find the company that offers the best deal for students.

More than 9 million students now receive financial aid on debit cards, according to a recent U.S. PIRG report that is highly critical of campus debit cards.

Financial aid is first distributed to the schools, which deduct tuition and other fees. Any aid that's left over for books, housing and living expenses is then disbursed to the student — traditionally by check.

But as school budgets have shrunk, more colleges have contracted with banks and financial firms to disburse this aid through debit cards tied to a bank account. For schools, this is cheaper than issuing paper checks, but it's not always economical for students.

PIRG's Williams, who co-wrote the report on debit cards, says it costs $5 to $10 for schools to issue and mail a check. He says students on average pay $49 a year to use a Higher One card.

"This is a huge cost shift to students," he says.

The card sometimes arrives in the mail on the school's letterhead, leading students to assume that the school has selected the best provider, Williams says. Students are directed to the debit-card company's website, which nudges them to have their aid put on the card.

Though they don't have to use the debit card, many don't know that, Williams says. And some don't realize the debit card is linked to a bank account.

"They don't realize it comes with all the responsibilities of an account, including overdrafts," Williams says.

Students can choose to have their aid transferred into their own bank accounts. But debit-card providers don't always make that easy, Williams says, and the process can delay aid to cash-poor students by two or three days.

"Most students need money now," Williams says. "It's not an option for them."

Once students opt for the debit card, they can be subject to a range of fees.

They might pay 50 cents every time they swipe the debit card. Some companies charge a $10 monthly inactivity fee if the card hasn't been used for six months, Williams says. And fees for having insufficient funds in the account range from $29 to $38.

The U.S. Department of Education requires that students be able to access their financial aid at no cost. But Williams says that in the case of Higher One, there are too few free ATMs on campus, leading to long lines. Students complain that these ATMs quickly run out of cash, forcing them to go to an outside ATM that charges fees, Williams says.

(Higher One says it has at least one ATM on each campus it serves and works to keep the machines stocked with cash.)

Williams says schools don't publicly disclose contracts with debit-card providers, so it's unclear what sort of deals are being struck. The PIRG report, though, noted that Florida State University receives money — about $410,000 in 2009 — from SunTrust when student IDs are linked to a bank account and then used as a debit card.

The National Association of College and University Business Officers says it plans to develop best practices regarding debit cards in light of theconcerns raised about them.

But Liz Clark, the association's director of congressional affairs, says the PIRG report should have gone further and compared the cost of debit cards to other banking choices that also carry fees.

Students have begun fighting back. Protests at some colleges about debit-card fees prompted the schools to renegotiate contracts, PIRG reported. And last month, several students filed a lawsuit against Connecticut-based Higher One, contending that the company coerces students into opening a bank account and hides the true cost of the card.

In a statement, Higher One says the claims are "baseless."

Hopkins spokesman Dennis O'Shea says the university started using Higher One this year after students complained about the inconvenience of paper checks. He says the school still feels the debit-card program is good for students. But given the news about Higher One, he says, Hopkins will send statements before the fall semester about students' options and the fact that debit cards carry fees.

Regulators also are looking at campus debit cards.

The Education Department is now considering new regulations on the cards. The Consumer Financial Protection Bureau is also monitoring the cards, says Rohit Chopra, the agency's student loan ombudsman.

Meanwhile, Chopra says students need to know about free options for accessing aid.

"It's their money," he says. "They don't have to accept a card; they can request a check or cash."

Before they head to school, he advises, students should shop around for a bank that offers low fees,and not necessarily the one with ATMs on campus.

Or students can sign up for direct deposit, which many schools — including the University of Maryland, College Park — offer to those who provide their bank account information. It's a quick and no-cost way to get aid.